As San Jose's burgeoning rents price out longtime residents, force some into homelessness and others to double-up with parents in multi-generational households, city officials are talking about how to bolster local regulations to help tenants.
In a memo on Tuesday's Rules and Open Government Committee agenda, downtown Councilman Raul Peralez proposes tightening up rent control and outlawing discrimination against Section 8 tenants. Supply and demand don't seem to be evening out anytime soon, he notes.
"In addition to providing shelter to the unhoused and increasing our rate of housing development at all affordability levels, we must strengthen tenant protections for renters," Peralez wrote, adding San Jose to a growing list of Bay Area cities considering rent control.
San Jose now caps rent control increases to 8 percent a year—a relatively lax rule compared to San Francisco and Oakland where annual increases have to keep pace with regional inflation, which the Consumer Price Index reported at 3 percent in 2014. San Jose's rent control only applies to homes built before 1979 anyway, leaving some 10,000 or so units unfettered by the ordinance.
Another legal hurdle: the Costa-Hawkins Rental Housing Act, which exempts properties built after 1995 from city or county rent control. But there's a possibility the city could extend rent control to include units built between 1979, when the municipal ordinance was first passed, to 1995, when the state adopted Costa-Hawkins.
Average rents in San Jose ticked up 11.5 percent this past year, making the monthly price of a two-bedroom apartment more than $2,600. For that price, someone would have to earn $31.70 an hour to afford it.
"Renters are facing a housing crisis of historic proportions in San Jose," Peralez said.
Some 27 percent of renters in San Jose (31,745) count as extremely low-income and 17.5 percent (20,465) as low-income, according to the city. More than 56,000 households shell out at least a third of their income for rent, and of that group, 29,500 pay at least half their gross income.
In addition to capping rent control, Peralez said the city should adopt a "just cause" ordinance making it illegal for landlords to evict renters without cause and another ordinance preventing discrimination based on source of income.
"In a normal housing market, the challenge a landlord may experience in filling a vacancy provides at least some protection against unfair evictions," he said. "In a market facing crises like those we see in San Jose today, such constraints do not exist, particularly for low wage seniors and families."
Peralez's proposal, amongst others, appears to have some support from council colleagues Margie Matthews, Magdalena Carrasco, Chappie Jones and Mayor Sam Liccardo. Though, they did caution that some proposals could have unintended consequences. The "just cause" rule, for example, could prevent landlords from evicting disruptive tenants. Others may be constrained by state law.
The California Apartment Association's Tri-County Division reportedly called the proposals, which are in their very early stages, "unwarranted."
"Rental property owners in San Jose have been operating under a set of rules for 35 years and to change the rules on them is quite unfair," Joshua Howard, the association's spokesman, told the Mercury News. "I think the city would be better served by thoughtfully increasing the supply of all types of housing."
I worked with John Vasconcellos on San Jose’s first rent control ordinance. When I worked at the City’s Housing Service Center, I represented tenants and landlords in mediation and arbitration hearings through the City of San Jose. I’ve seen it all from both sides of the fence!
Within a year, the original rent control ordinance became so watered down, thanks to property owners lobbying for change, it was/is useless. Property owners have so much time and money that they destroy ANY chance of getting proper tenant protections or limited rent increases intended to END rent gorging, or that would keep them from evicting good long term tenants so that they can bring in new tenants at a higher rate of rent.
Further, Section 8 gets a bad rap because many of these Voucher holders are good tenants. Many are seniors or persons with disabilities. Section 8 renters are no different than regular tenants. There are good tenants and there are bad tenants. It is up to landlords to screen them carefully.
While I agree with Just Cause Eviction, it has its good and bad points. In some cases, it has forced landlords to keep horrible tenants in units that they are either destroying, annoying good tenants with bad behavior, or whom are not paying their rent on time or at all.
The bottom line is that something has to give. Rents are out of control, and SOME not all landlords need to change their practice of rent gouging. They also need to be forced to keep up with badly needed maintenance. Some of these rental units are in bad need of repair and proper upkeep.
I would hope that this time around, that landlords and their Property Management Companies with work with Tenant Rights groups to create something that works for everyone instead of having a, “My way or the highway” mentality. And that City leaders need to stop caving into lobbyists demands and do what is right for both sides.
Thank you Kathleen for that thoughtful and compassionate response. I have an emotional response, one of revulsion: I cannot stand the whiny landlords. They have enough money for maintanence, (their # one complaint) believe me. It breaks my heart to see poor folks suffering from lack of decent housing.
> It breaks my heart to see poor folks suffering from lack of decent housing.
Well, then. Buy a house and provide some decent housing for some poor folks.
Why are you so selfish?
Poor folks would rather rent housing from you than hear you wallow in your self centered broken heartedness trauma.
Thank you Kathleen for that thoughtful response. However, I am not so forgiving of landlords. Landlords whining over maintanence costs (their fall back complaint when rent control is raised) but honestly, they have enough money, believe me.
I had a LL who was so cheap – never did any upgrades like AC or doublepaned windows – that the temperature in the house got so high the thermostat could not register it, yet, guess what? She raised the rent every single year! Oh, yes, she had a large mansion in hills and many properties.
My heart goes out to those who are forced to sleep on the grass (where they can find it), they are people too. God forgive us all. We are a cruel nation.
Jill- I’m sorry you’re going through that. You can file a complaint with Code Enforcement and with the City’s Housing Department. Landlords can be made to reduce your rent until repairs are made. There is a great book on Tenant/ Landlord Rights, you might want to buy it.
I am very blessed to have a wonderful Landlord. He and his wife immigrated here from Greece and bought two fourplexes to sustain them when they retired. They are the kindest most loving people.
I have lived here going on 16 years. His units are rarely vacant and his rent increases are very reasonable. During the recession, he actually REDUCED our rent! If I need anything fixed, he takes care of it immediately. That is why I have stayed here so long. A good Landlord wants good long term renters, not just money.
When my Landlord rented to a few bad tenants, he gets rid of them pretty quickly. Thank God!
When tenants are looking for a unit, they should interview the Landlord to see what kind of people they are. I know the rental market is tough, but it will be your home, so treat the process with that in mind. If you see units turning over quickly, it usually means the Landlord is either: Raising the rent too high annually, or doesn’t do required maintenance! Be ware of renting from people like that. If you go to see a unit that needs repairs, don’t buy their story that they are going to fix it. They rarely do once they get you to rent it.
I think things are so bad right now that the County and the City are going to do something to try and curtail rent gouging. At least I hope so. Renters need to step up to the plate NOW and demand fair rents, or nothing will change. Landlords need to take a step back and weigh huge profits against good tenants and a reasonable return. If we all work together, we can win on both sides.
Kathleen: Do you have any data to establish what percentage of landlords are making HUGE profits?
The entitlement generation–AC and double paned windows for ALL!
I’m a landlord. There is supply and demand. I’m part of the ‘Supply.’ The Supply of Landlords.
When you take adversarial action against our business, we take units off the market. SEE HERE ==> http://mjperry.blogspot.com/2011/05/because-of-rent-control-sf-has-31000.html
You can take adversarial action against the Supply of Landlords but you cannot force me to stay in business. “Price controls cause shortages.”
Rising rents *attract builders of apartments* who want to capitalize on that. But then the City allows lots of apartments and BAM property owners start competing with each other by lowering rents.
If you signal to the Supply of Landlords that you are going to control their asset — THEY WILL NOT BUILD THE ASSET.
When cities take adversarial action against the Supply and Demand for apartments by taking control of the apartment property YOU GET FEWER APARTMENTS BUILT.
And as the population increases…. and the Supply of Landlords has shriveled to nothing because — “Why invest in San Jose, I’ll build apartments in Texas” —
— well just look at San Francisco. THERE IS A HUGE SHORTAGE OF WILLING LANDLORDS IN SAN FRANCISCO.
There is heavy-duty rent control there. But due to the shortage of willing landlords, caused by the City seizing economic control of their asset — IT’S THE #2 most expensive rental market in the country.
What rent control advocates NEVER THINK ABOUT IS — it takes people, it takes a *Supply of Willing Landlords* to KEEP RENTS DOWN.
You take control of their asset — its economics — you can kiss your Supply of Landlords goodbye.
Again, check this out ==> http://mjperry.blogspot.com/2011/05/because-of-rent-control-sf-has-31000.html
SAN FRANCISCO HAS ATTACKED and destroy the Supply of Willing Landlords.
So there is a *huge shortage* of apartments.
And thus, *rents are astronomically high*
IN A “RENT CONTROLLED” city.
Ronald- I’m guessing you honestly believe this nonsense you are touting. While I agree that you deserve a fair return on your investment, I disagree that you have the kind of power you think you do over renters. I’ve lived in Santa Clara County for decades now. I’ve watched renters leave in droves when things get too expensive. Renters also tend to pool their resources and buy a home, or move a way from San Jose and either commute, or find jobs where they move to. The way things are going now, I won’t be surprised to see that occur again in the next couple of years because SURVIVAL takes precedence over greed every time.
Most Landlords who want to keep their properties well maintained and their vacancy rate low, tend to be the best people to rent from because they actually realize that by being fair and decent with their tenants, that everyone wins.
Kathleen, take an Econ 101 course. Better yet, work your backside off for 20 years, don’t drink, smoke, etc. save/invest your hard-earned money & take a huge risk to buy a small rental property w/ the hope of making a better future for your family. Then come back here & whine about rents. San Jose is creating incentive for investors/developers to look elsewhere to build apartments. If they don’t want to build here, there will be shortages & rents will go up – simple. If San Jose keeps attacking apartment owners, they will simply convert to condos and supply will actually decrease – as has happened in SF – and rents will increase. Simple.
You don’t understand market capitalism, or just choose not to accept it, and seem to hope for an utopian socialist society. I bet you don’t know that over half of all rental properties in San Jose are 3-7 units. These are owned by families, many of them minorities, probably hard-working immigrants that came here in love the American dream & have worked their backs off to buy those properties.
I am one of those. Worked 20 years, saved and bought a fixer-upper rental property. Why punish me any more than punish a grocery store that raises prices, or a barber or gardener?
Now, all of that said, I’m 100% in favor of the city of San Jose doing this. Why? No where in the history of the world has rent control done anything other than the exact opposite of what it intended. SF & NY have the harshest rent controls & highest rents in the country. The two simply go hand-in-hand. Again, Econ 101 will help you understand why.
If you want lower rents, ask the city council to encourage the construction of more apartments, not less. Nah, never mind, I like having less competition.
I’m sure this is all completely over your head, but oh well. I’ll still get higher & higher rents over time due to these policies – its just a fact. Do an internet search on “rent control failure” and you’ll see a ton of research on the topic.
Well there’s the flipside to this djman. There’s a lot of property owners that never had to work their backside off. They basically had the properties handed to them when someone dies. They have plenty of money to live off of.
I’m not knocking them, nor am I knocking the raised rents they throw at people, but if your only criteria for a valid rent increase is “The landlord worked their butt off to get here” well guess what? There’s plenty of people I grew up with that didn’t do diddly squat for work, and are plenty well off increasing rents on people.
Right now they’re making money hand over fist. Wife and I fall into the “Worked our butts off” category. We can rent our house at a profit over mortgage now. Maybe when the last kid leaves the nest we’ll retire in some nice coastal Oregon town, and keep this property as income.
There you go, over to the dark-side of evil capitalist profit tackers, good for you!
The ethos of the populist underclass — the majority of voters — is that of tribalist hunter-gatherers.
They don’t think about “supply and demand”; they only think about consumption. Specifically, they only think about IMMEDIATE consumption.
Saving, investments, markets, etc. are simply not a part of their consciousness or calculus.
When a hunter-gatherer wants something, the tribe will share with him.
When the tribe needs more whatever, the shaman will call for a hunting party to go into the forest and take it.
The problem for landlords is that the “housing economy” simply looks like the forest to the populist underclass, and the political shamans are more than eager to lead a successful hunt.
My advice to landlords is to understand that the dominant ethos of “democracy” is stacked against them, and to recognize that the “free market” for rental housing is mostly a fiction,
If you have money to invest, don’t invest in rental housing in urban vote plantations like San Jose, San Francisco, New York, or wherever. Invest in companies that make websites for Obamacare. They make tons of money and don’t have to produce anything that works.
I moved to my apartment in July of 2010 for a rent of $995. My rent is about to go up to $1460. There is NO WAY that the last 5 years have caused a 50% increase in costs for the landlord. I sure haven’t enjoyed that kind of pay raise. I’ve had no improvements on my apartment, and it now has 5 more years of wear and tear. This is all about the profit. Ronald S. Ronny is the perfect example of how we are being manipulated. He’s got us over a barrel. “Don’t want to pay my rent? I’ll just take it off the market until you comply. Tired of me making money while you eat Raman… too bad. I’ve got the property, you will pay or join the other homeless living on Guadalupe River.” The rich keep getting richer and the Guadalupe River keeps getting new residents!
Rhonda, in 2010 the market was down and rental prices fell really low, many properties didn’t have any profit at all or had some losses. Besides the maintenance costs there are multiple other costs and payments they encounter (loan payments, taxes, etc). Now the market is back up again, and they have the chance to finally get their profits. That’s why they invested in this in the first place, even knowing there might be a crisis every 10 years or so. As a capital owner you can choose where to invest your money. You can invest in index funds and pretty much safely and easily get your 5-7% return per year. If you are into an entrepreneurial state and want to earn more, you can invest in business and rental property is one of these options. No one expects you to work for free, and no one expects business owner to run their business on the edge of the break-even point. They are supposed to have profits, and better good profits, so that more business owners are attracted to this market and with additional supply help the prices to go down, and service to get better.
San José needs jobs to increase its tax base. And the people who land those jobs need a place to live. Residential real estate is easy to build and a quick return on investment — more so than commercial real estate. So for decades, San José has become the bedroom of the Bay Area because officials couldn’t say “No” to residential developers looking to make a quick buck. Neighboring cities grew smarter with a healthy balance of jobs and housing.
Not all jobs can or should be high-paying tech jobs because techies need baristas, maids, mechanics, and other “support staff” who should earn at least a livable or even higher middle wage. And they should be able to live near to where they work. Housing must support people at all income levels. And population diversity enriches a community.
But business is business, and developers need to maximize their investment, so affordable housing isn’t on their radar unless it’s mandated. There are exceptions, but those are few and far between. I can think of two local companies that specialize in affordable housing, but there’s no way they can keep up with demand.
Plus, recent court rulings have squashed laws that mandated that a certain percentage of new housing be affordable. Local jurisdictions are now trying to come up with bulletproof laws that support the construction of affordable housing. In the meantime, much-needed affordable housing isn’t built and the demand gap widens.
It will take decades to rebuild San José’s tax base to a level where we will be able to afford police and fire fighters, streets in good repair, maintained parks, library hours, and all of the other services and amenities that a metropolitan city should have.
Oh please stop your socialist wining, If you want cheap affordable housing move to Detroit.
If you want rent control move to Berkeley.
If you want free housing in Silicon Valley the third most expensive housing market in the country, get the city, county, an state, to drop property taxes to free.
Lets make Obama care free. My Obama care cost $850 a month sorry no subsidy.
Lets make the cops, fireman teachers work for free just like doctors, cut their pension down from 6 figures, they could live in government housing.
I lived in a government housing for 4 years it was called a barracks, it’s free only two to a room! You earn it.
Lets make a free education really free, home school your kids, you can cut out the teachers and tax collectors.
Water cost to much, do you think we will have more if its free?
Should your housing be free and your food and heath care be free, how about a free ride on public transportation.
How about a free car, how else are you going to get to work?
I can’t afford to live here any more, taxes and mandatory heath care exceed my SSI. and pension check I live on 40 years of savings, Silicon Valley ant free and it’s not ever going to be affordable.
The people that have made it here worked there butts off 50,60.80 hours a week sometime 2 or 3 jobs and school.
Silicone Valley is not easy street and know on here owes you anything. You owe them!
They have been paying your taxes.
I’ll rent you my house, taxes $1200 a month mortgage $3500 maintenance insurance $150, utilities $300- $400 a month.
Keeping in mind I still have a lot of new expenses moving to Detroit so I can live for free.
What do you think my profit should be? $100 a month?
Should you, greedy free loader live better than I do?
I have an Idea you by my house and I’ll rent it back from you at an affordable rate.
Want FREE go join the Army spend a few years, we will owe you something then.
What you see out there for rent reflects reality of living another day in paradise.
The housing crisis is due to a lack of housing stock. Santa Clara County is going to have another 200K-300K people in the next five or ten years. The Bay Area is a national sweet spot for jobs, climate, services, fun, etc. Unfortunately, the same forces that want to help in one area, housing stock, are also driven to make sure housing expansion is limited. The shortage will not be solved with just a little in-fill here and there. Large new developments are nearly impossible to build. In Santa Cruz County, the base fees for the permits required to build a 3 bedroom house now exceed $48,000! The reasons are mostly environmental, and mostly revolve around litigation, confidential closed-door litigation. People complain about lobbyists, but lobbyists are a joke compared to the litigants. In Santa Clara County, there is now a fee for per-acre habitat destruction fee, and depending on the area the fee can exceed $180,000/acre!
When anything is in short supply, people compete for it, if land can’t be developed, rents go up. The rest of the supply-chain sniffs out the market situation and also raises prices, and then the government jumps in and demands a cut as well. Finally, the little guy screams about evil landlords and the government is only too happy to dip in and take even more control and money.
Someone just pointed out, where are you going to get the water to run these places?
Perhaps that should the California Supreme Court could order God to make it rain!
If you believe rent control is a good thing, I highly recommend that you enroll in an Economics course at your local college. You will be explained in great detail how rent control destroys cities. Choose any college you want because the math does not change. Rent control is an extremely near-sighted idea created by people who have no concept of the economy in which they live in. BTW, where did council member Raul Peralez come up with this magic number of 4 percent? I would be very interested to see his math on that. There is no math done on that because he pulled that number out of his hat as simply a number that sounds good.
If you want more housing let the price go up, people will build it! That will drive the price back down.
Simple supply and demand.
End of story.
Get over your endless broken socialist rhetoric!